BIR Ruling

November 22, 1967 Messrs. Meer, Meer & Meer Attorneys-at-Law Suite 302 Singson Building Plaza Moraga, Manila Attention: Mr . Senen M . Castillo Gentlemen : This refers to your letter dated October 24, 1967 stating the following: "In connection with the processing or repacking of Anti-Biotics by our client Muller & Phipps Manufacturing Corporation, we would like to request a ruling on the following cases. cdll "We would like to call your attention to the fact that in the cases illustrated below whether Case A or Case B the materials are to be imported by Muller & Phipps Manufacturing Corporation itself, who will pay the advance sales tax on the said importations. Once imported, the following steps are proposed to be undertaken: CASE A 1. Anti-biotic bulk is imported in a carboy or in a fiber drum or in any similar container. 2. To ensure that content is uniformly mixed, a carboy or drum filled with bulk mix is rolled on its side. Or alternatively, container is opened and content stirred either by machine or by hand. In both cases, nothing is added to the bulk mix and it does not undergo any change. 3. Bulk is filled into capsules or into bottles. 4. Filled capsules are stripped and placed in cartons or filled bottles are labelled and placed in cartons. CASE B 1. Anti-biotic active ingredient is imported in a fiber drum or in a carboy. 2. Active ingredient is dumped into a mixer or blender and an excipient (lubricant) is added and mixed. 3. Resulting bulk mix is filled into capsule or into bottles. 4. Filled capsules are stripped and placed in cartons or filled bottles are labelled and placed in carton. llcd "Under the cases illustrated above, it is our belief that our client should be considered as a mere repacker and, consequently, not subject to the payment of additional sales tax or any other tax, other than that which is previously paid in the form of advance sales tax on the importation of products into the Philippines." In reply, I have the honor to inform you that under Case A as illustrated above, your client is an importer-repacker subject to the fixed tax prescribed by Section 182(A)(1) of the Tax Code. However, its sale of the repacked anti-biotic mix is no longer subject to any tax. Under Case B however, your client is considered a manufacturer within the purview of Section 194(x) of the Tax Code subject to the P20.00 fixed annual tax and to the 7% sales tax prescribed in Section 182(A)(1) and 186 respectively, of the Tax Code. LLphil Very truly yours, (SGD.) AMBROSIO M. LINA Commissioner of Internal Revenue